Divorce: The financial implications

WorthFeature: Having a specialist in your corner can help

"It shouldn't be that one party is way better off and the other one is at the soup kitchen."- Sara Tilberg

In 2012, the U.S. General Accounting Office reported that women's household income falls by
an average of 41 percent after a divorce - almost twice the size of the drop that men experience.

Linda, who asked that only her first name be used, had been a stay-at-home mom since her first child was born. While she may not have been familiar with the statistics, she knew when her husband sought a divorce that not having had a paycheck put her in a vulnerable position - despite the value of the nearly three decades she spent raising and home-schooling the couple's four children.

"My dad told me, 'Be careful - the lady usually winds up with the short end of the stick,'" she recalls.

Linda didn't want to be that lady. Toward that end, her attorney suggested she sit down with Sara Tilberg.

Finding her niche

Tilberg is a Certified Divorce Financial Analyst (CDFA). If you haven't been through a divorce, you probably didn't know there were people with such titles. Until a few years ago, neither did Tilberg.

She was working as a financial advisor. Some of her clients, who were getting divorced, came to her with divorce-related financial questions. They didn't want to agree to a settlement without knowing they'd be financially OK in the future.

"I started researching and stumbled across this [CDFA] designation," says Tilberg. "I knew it was my niche. I'm passionate about helping women and empowering them to make informed decisions."

About 95 percent of clients she serves as a CDFA are women; the rest are divorcing couples who consult her jointly. She says she typically deals with the person who has been "more removed from the household finance." Now, with legalizing marriage - and hence legal divorces - for same-sex couples, she suspects a similar pattern will emerge.

The CDFA designation has existed for about 20 years, says Tilberg, who earned the title in 2012. She estimates Minnesota has about 20 active CDFAs.

Common pitfalls

Emotions and exhaustion, says Tilberg, can spell trouble for divorcing women. Emotions may override logic when it comes to decision-making - and often, she adds, "the person you're getting divorced from knows exactly which buttons to push."

In deciding whether to keep the house, for example, a woman might think, "My kids were raised here; I can't uproot them." But if she can't afford the ongoing upkeep, property tax increases and so on, says Tilberg, "Let's address it now - so you're not going through another heartache in a few years."

Certainly, divorce can be exhausting. "A woman might think, 'I'm tired of it, and I just want to settle,'" says Tilberg. "We hear that all too often."

Related to this is a tendency to focus on the immediate crisis - as in, "I just need to get through today" - without looking long-range. Helping clients think 10, 20, or 30 years out is a big part of a divorce financial analyst's role. This helps avoid surprises later - anything from "When I agreed to that settlement, I didn't know kids ate so much when they got to be teenagers" to "I thought I'd be able to retire by now."

Not thinking long-term can be costly in more ways than one. "I've heard horror stories that it can cost $50,000 to go back and try to rectify [a divorce settlement]," Tilberg says. This includes court costs and attorney fees - and the outcome is uncertain, although the money is spent regardless.

A different angle

Tilberg says, a big part of her job is "removing the fear" often associated with divorce - at least, the finance-related fear.

"Can I afford the house? What about retirement? We can address some of those questions that keep them up at night," says Tilberg.

For Linda, the concern was college for her two youngest kids, as well as her own degree - she'd just started a two-year community college program. Her husband, she says, was being "stubborn" - and she, in turn, had dug in her heels.

Tilberg, says Linda, helped her attain her desired outcome "from a different angle."

"Sara could re-arrange things so it would look more appealing to him," she says. "Maybe it's not as much money each month from him - but more from his retirement [account] later. It will come out about the same, but it will look better to him."

Asked about those statistics about women's post-divorce standard of living, Tilberg insists it doesn't have to be that way. "It shouldn't be that one party is way better off and the other one is at the soup kitchen," she says. "It doesn't necessarily mean both parties will have the same standard of living - but it should be fair."

Or as Linda puts it: "Don't just cave in and accept something because you don't want the fight. It helps to have someone in your corner who knows what they're talking about."

GOODTOKNOWWhen meeting with a Certified Divorce Financial Analyst (CDFA), Sara Tilberg, of Divorce Settlement Solutions, recommends bringing along this documentation: Three years of tax returns
 Last three months' statements for bank and investment accounts
 Last three months' statements for all credit cards
 Most recent pay stubs for each party
 Social Security estimate statements for both parties
A post-divorce checklist includes: Remove your former spouse's name from accounts
 Close any joint accounts
 Notify all insurance policies
 Name changes, if necessary
 Start building your own individual credit